Candidates must address billion dollar problem

With Manitoba’s next municipal elections just around the corner (October 24th), small business owners across the province are paying close attention to the issues being raised by mayoral and council candidates. One important issue, that is rarely discussed, is that Manitoba’s municipalities have been chronically overspending. Manitobans work hard to live within their means and expect their local municipalities to do the same. Despite this, overspending among Manitoba’s largest municipalities has become a serious, costly problem. New research by the Canadian Federation of Independent Business (CFIB) estimates that overspending cost residents within these communities a combined $1.17 billion between 2008 and 2015. The vast majority of business owners and residents are tired of yearly property tax increases, frontage levies going up, or utility fees continuing to climb. In Winnipeg, many business owners are also charged the Winnipeg Business Tax – the only city to do so in Canada. Make no mistake; unsustainable spending growth leads to higher taxes. And, in order to maintain services while avoiding tax increases, governments should limit spending increases to no more than inflation and population growth. However, according to CFIB’s Manitoba Municipal Spending Watch (4th Edition), the province’s local governments have seldom spent at or below sustainable levels since 2008. In fact, Manitoba’s 27 largest communities increased real operating spending by 23 per cent during this period, despite the population only growing by 9 per cent. That’s over two-and-a-half times CFIB’s sustainable amount. In the City of Winkler, per capita real operating spending was unchanged from 2014 to 2015. However, real spending grew by 24 per cent from 2008 to 2015, while population grew by 16 per cent, or cumulatively $591 more per resident over this time. As a result, Winkler ranked third in the Cities and Towns category for sustainable spending. In the City of Morden, per capita real operating spending was unchanged 2014 to 2015. However, real spending remained 23 per cent higher in 2015 than in 2008, while population grew by just 17 per cent, or cumulatively $407 more per resident over this time. Despite this, Morden ranked first in the Cities and Towns category for sustainable spending. According to the report, Manitoba’s problem is driven by labour costs, which account for 59 per cent of total municipal spending, and these costs are growing quickly. Over the eight years covered by the report, the amount paid for municipal workers grew by an inflation-adjusted 28 per cent overall. This problem was recently highlighted by Tom Brodbeck, who revealed that Winnipeg spent a staggering $306 million more on salaries and benefits in 2017 than it did in 2007. While growing communities do require additional municipal workers, the cost-per-worker is unreasonably high and causing financial strain. In Manitoba, municipal employees make 14.1 per cent more than someone in the private sector doing the same job, when you consider wages, lucrative benefits and hours worked. Clearly, these growing costs are unsustainable, and some municipalities are beginning to take notice. For example, better bargaining by the City of Winnipeg on new collective agreements is expected to save taxpayers $21 million in 2018. Macdonald, Headingley, Rosser and St. Francois Xavier are looking at ways to save money by co-ordinating and sharing services, like procurement. However, these examples remain too few and far between, and more steps must be taken to curb growing costs. Nearly everyone can agree that Manitobans should be spending more on infrastructure or lowering taxes that are too high and climbing. For context, the $1.17 billion in combined overspending is more than 10 times Winnipeg’s record-high road and sidewalk repair budget for 2018. Similarly, this amount would mean that a family of four could have saved $4,696 in taxes. Unless elected officials take action to rein in their operating spending, this problem will continue to eat away at our failing infrastructure and force our already high taxes even higher. We must push this important issue with the candidates knocking on our doors so sustainable spending becomes a priority on October 24th. Jonathan Alward is the Manitoba director of provincial affairs with the Canadian Federation of Independent Business (CFIB). CFIB advocates on behalf of 4,800 small and medium-sized businesses in Manitoba and 110,000 members across Canada. Jonathan can be reached at msman@cfib.ca or you can follow him on Twitter @cfibMB.